Inflation at 3-year low, but food prices remain high

A sharp spike in prices of food articles, such as rice, wheat and vegetables, offset the three-year-low rise in the wholesale price index-based inflation rate.

While the inflation rate grew at 6.62% in January against 7.18% in December, 7.24% in November and 7.23 % in January last year, food prices rose 11.89% in January on a year-on-year basis.

Further, inflation in manufactured items category too witnessed a decline and stood at 4.81% in January.

Fuel prices rose 7.06% in January against 9.38% in December. A likely increase in diesel and petrol prices will reflect in the February inflation number, available next month.

However, the devil in the fresh price data released on Thursday hides in the detail — the wholesale price of rice grew 18.09%, wheat 17.31% and pulses 21.39%. The overall vegetable price grew 28.45% and onion turned dearer by 11.52% and potato by 79.07%.

The retail inflation rate — a more realistic cost-of-living index, as it captures shop-end prices — grew 10.79% in January because prices of most goods and services, from medicines to movie tickets, rose sharply.

“Retail inflation is still high. The WPI-based inflation rate in primary and food articles are still at higher levels. Effort should be made to release larger stocks of food articles in the market,” C Rangarajan, chairman of the PM’s Economic Advisory Council, said.